What is a pay stub?
A pay stub — also called a paycheck stub, pay slip, or earnings statement — is a document that accompanies an employee's paycheck. It provides a detailed breakdown of how the employee's pay was calculated for a specific pay period, including gross earnings, every deduction taken, and the resulting net pay (take-home amount).
Pay stubs serve multiple purposes: they give employees transparency into their compensation, provide proof of income for loan applications and rental agreements, and create a paper trail for tax filing and compliance. For employers, pay stubs are a record of payroll accuracy and tax withholding compliance.
What to include on a pay stub
A complete, compliant pay stub should include these elements:
- Company information — business name, address, phone number, and EIN (Employer Identification Number).
- Employee information — full name, address, employee ID, and the last four digits of their Social Security number.
- Pay period — the start and end dates of the pay period (e.g., "March 1 - March 15, 2026").
- Pay date — the date the paycheck is issued.
- Pay frequency — weekly, bi-weekly, semi-monthly, or monthly.
- Gross earnings — total pay before deductions, broken down by regular hours, overtime hours, and any bonuses, commissions, or tips.
- Deductions — every withholding and deduction, itemized: federal income tax, state income tax, local tax (if applicable), Social Security, Medicare, health insurance, dental/vision insurance, retirement contributions (401k, IRA), and any other deductions.
- Net pay — the final take-home amount after all deductions. This is the amount deposited into the employee's bank account or written on their paycheck.
- Year-to-date (YTD) totals — running totals for gross earnings, each deduction category, and net pay from January 1 through the current pay period.
Earnings vs deductions: understanding the two sides of a pay stub
Every pay stub has two core sections: earnings (money in) and deductions (money out). Understanding both is essential for creating accurate pay stubs.
Earnings
Earnings include everything the employee has earned during the pay period:
- Regular pay — salary amount or hourly rate multiplied by regular hours worked.
- Overtime pay — hours worked beyond 40 per week, typically paid at 1.5x the regular rate.
- Bonuses — performance bonuses, signing bonuses, or holiday bonuses.
- Commissions — earnings based on sales or performance targets.
- Tips — reported tip income for tipped employees.
- Paid time off (PTO) — vacation, sick leave, or personal days used during the pay period.
- Holiday pay — premium pay for hours worked on company holidays.
The sum of all earnings equals gross pay — the top-line number before any deductions are taken.
Deductions
Deductions are amounts withheld from gross pay. They fall into two categories:
- Mandatory deductions — federal income tax, state income tax, Social Security tax (6.2% of wages up to the annual limit), Medicare tax (1.45% of all wages, plus 0.9% on wages over $200,000), and any local or city taxes.
- Voluntary deductions — health insurance premiums, dental and vision insurance, life insurance, 401(k) or retirement plan contributions, HSA or FSA contributions, union dues, and garnishments (court-ordered deductions like child support).
For a detailed breakdown of every deduction type, see our guide on understanding pay stub deductions.
Step-by-step: Create your pay stub
Step 1: Add company and employee details
Start with your company name, address, and EIN at the top of the pay stub. Below that, add the employee's full legal name, address, employee ID number, and the last four digits of their SSN. This information identifies both parties and is required for compliance in most states.
Step 2: Set the pay period and pay date
Clearly state the pay period start date, end date, and the actual pay date. If you run bi-weekly payroll, the pay period might be "March 1 - March 14, 2026" with a pay date of "March 20, 2026." The pay frequency (weekly, bi-weekly, semi-monthly, monthly) should also be noted — it affects how annual salary is divided per pay period.
Step 3: Enter gross earnings
For hourly employees, list regular hours worked, the hourly rate, and the subtotal. Add overtime hours separately at the overtime rate (typically 1.5x). For salaried employees, list the per-period salary amount. Include any bonuses, commissions, or additional pay earned during the period. Add all earnings to get the total gross pay.
Step 4: Itemize all deductions
List every deduction on a separate line with the amount withheld for this period:
- Federal income tax (based on the employee's W-4 withholding)
- State income tax (varies by state — some states have no income tax)
- Social Security tax (6.2% of gross pay up to the annual wage base)
- Medicare tax (1.45% of all gross pay)
- Health insurance premium (employee's share)
- Dental/vision insurance (if applicable)
- 401(k) or retirement contributions
- HSA/FSA contributions
- Any other deductions (union dues, garnishments, etc.)
Total all deductions. This is the amount subtracted from gross pay.
Step 5: Calculate net pay
Net pay = gross earnings minus total deductions. This is the employee's take-home pay — the amount deposited into their bank account or printed on their paycheck. Double-check this calculation. Payroll errors erode employee trust and can create compliance issues.
Step 6: Add year-to-date totals and export
Include YTD running totals for gross earnings, each deduction category, and net pay. YTD totals help employees track their annual income and deductions, and are essential when employees need proof of income. Export the completed pay stub as a PDF for distribution.
How to generate pay stubs in bulk
If you have multiple employees, creating pay stubs one at a time is tedious and error-prone. Instead, automate the process. Create a pay stub template with dynamic fields like {{employee_name}}, {{gross_pay}}, {{federal_tax}}, and {{net_pay}}. Export your payroll data into a spreadsheet with one row per employee. Upload it to PDFMakerAPI and generate a personalized pay stub PDF for every employee at once — whether that's 5 employees or 500.
This approach eliminates manual data entry, reduces errors, and ensures every employee gets a consistent, professional-looking pay stub. Run it every pay period with updated data.
Pay stub compliance tips
- Check your state's requirements — most states require employers to provide pay stubs. Some require specific information. See our pay stub requirements by state guide.
- Keep records — retain copies of all pay stubs for at least 3 years (longer in some states). This protects you in audits and disputes.
- Use consistent formatting — a standard template across all employees reduces confusion and errors.
- Distribute on time — provide pay stubs on or before pay day. Delays can violate state labor laws.
- Separate contractor pay — contractors don't receive W-2 pay stubs. If you work with contractors, see our contractor pay stub guide.
Creating a pay stub with AI
The fastest way to create a pay stub is to describe what you need. Type something like "create a pay stub for a bi-weekly salaried employee with health insurance and 401k deductions" and AI generates a complete template in seconds. You can refine the layout with follow-up prompts or switch to the drag-and-drop editor for precise formatting. Try it free.